C-stores get hooked to the web

By By Andrea McKenna FindlayInternet Retailer

Just as they enthusiastically installed ATMS a decade ago to drive traffic and make money, c-stores today are installing web-enabled kiosks.

Fifteen years ago, convenience stores realized they could capitalize on selling convenient services as well as products. They went on an ATM binge, with the result that 63% of the nation’s 120,000 c-stores have ATMs. The success of ATMs has kept c-stores on the look out since for new technology that could mean additional convenience sales. The Internet is now supplying the opportunity.

Two major convenience store chains-Phillips Petroleum Co.’s Phoenix-based Circle K chain and Dallas-based 7-Eleven Inc.-are installing web-enabled kiosks to make accessing technology as much a convenience as picking up a gallon of milk and some lottery tickets. In addition, Phillips is installing kiosks in truck stops. “The core value of our business to the consumer is convenience,” says Scott Templeton, innovation group manager in charge of kiosk deployment for Phillips Petroleum. “We’re pretty good at understanding how consumers define convenience because there is nothing we sell that consumers can’t get somewhere else. Most of the products and services on the kiosks have that convenience tie.”

Circle K’s kiosk program is the more ambitious. The 2,000-store chain is offering a range of services on the kiosks, from voice over Internet phone calling technology to video conferencing with other Circle K sites, checking e-mail and the ability to download content to wireless devices. 7-Eleven, by contrast, is limiting kiosk services to financial services-ATM cash dispensing, check cashing, money order purchases and money transfers-and plans to add functions later.

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The programs are limited for now, at least by c-store standards. Phillips is testing the concept in 36 Circle K stores in Phoenix and 41 Circle K stores and truck stops in Philadelphia, while 7-Eleven is testing in 100 stores in Texas and Florida. But many believe web-enabled kiosks have the same future in c-stores as ATMs have enjoyed. “Kiosks will become a trend in c-stores just like ATMs,” Templeton predicts.

In fact, it is convenient access to the Internet that gives kiosks their appeal, analysts say. “The growth in the kiosk industry is in web-enablement. This is a really attractive and promising market,” says Rufus Connell, industry business manager for market researchers and consultants Frost & Sullivan who has researched the kiosk business and written several reports on kiosk use. “E-mail is one of the largest forms of communications and providing public access to that is a pretty positive story.”

While an early reason c-stores liked ATMs was that the machines put cash into customers’ hands which they could then spend in the store, the appeal of kiosks is different: C-stores view them as products on which they can make money. It wasn’t until the ATM networks eased up on their rules prohibiting ATM owners from charging consumers to use ATMs that c-stores began to make serious money on the transactions themselves. Web-based kiosk deployments until now have not been direct revenue producers, either. “Kiosks today are more like helping hands, providing directions in hotel lobbies or electronic tickers for users,” Templeton says. “The monetization of those activities into income for the company is very weak.”

But Phillips, while hoping kiosks will drive traffic to the stores, is planning to make kiosks into revenue centers right off the bat. “What we’re doing is very different,” Templeton says. “Our program is about providing a convenient customer service.” Translation: Customers will pay for convenience.

Phillips, which has branded its kiosks ZapLink, is testing two approaches in its different markets. The company selected two kiosk vendors-Burnaby, B.C.-based Info Touch Technologies Corp. and Bessemer, Ala.-based Global Access Alliance Inc.-to provide basic services in both markets:

Voice over Internet phone services

Video teleconferencing

Local news and information, including mapping and directions

Bill payment, including cash payments for Internet purchases

E-mail access

Online shopping

Internet surfing

Entertainment and games

Capabilities to download music and software to wireless devices

Product coupons.

Both machines accept cards and cash for payment.

While the vendors are providing many of the same features, there are enough differences between the Phoenix and Philadelphia tests to give Phillips Petroleum insight into what works and what doesn’t. “The company has told us standard capabilities they want, but they’ve also given us the opportunity to prove out different capabilities,” says Robert Needham, president and CEO of Global Access Alliance, which manufactures the Philadelphia kiosks. Aside from the features, the two kiosks look different. The Global Access devices, for examples, look more like ATMs, with a touch screen for selecting services and a telephone pad for making calls. The Info Touch kiosk screen looks more like a web browser.

A laughing matter

In Phoenix, Info Touch has installed kiosks that, in addition to the basic list of services, provide video postcards and the ability to participate in a global interactive video message board called “Speak Your Mind.” This interactive video function allows store visitors to record personal messages with the video and audio equipment attached to the kiosk. Anyone using Info Touch’s kiosks and can see and hear the messages and the company plans to make them available on the web eventually. Info Touch plans to spin the interactive function into a dating service.

An interesting twist with the Speak Your Mind service-and one that is sure to attract young people-is a stand-up comedy contest. The cable channel Comedy Central sponsors the contest and will run 1,800 30-second ads in Phoenix to entice would-be comedians to audition at the Circle K kiosks. “Comedy Central will pick the best ones to come to their studios in New York,” says Hamed Shahbazi, chairman and CEO of Info Touch, a company that is 20% owned by Compaq Computer Corp.

Meanwhile, the kiosks in Philadelphia feature a $1-per-20-minute-phone call service using voice over IP technology. The kiosks include a phone receiver and a bill acceptor and credit card reader to pay for the calls. Customers can make as many calls as they want to any of 16 countries within 20 minutes for $1.